Quad City Bank & Trust, plaintiff-appellee/cross-appellant v. Elderkin & Pirnie, P.L.C., defendant-appellant/cross-appellee.
870 N.W.2d 249
Iowa Ct. App.2015Background
- Quad City Bank sued law firm Elderkin & Pirnie for legal malpractice after the firm represented the bank in a failed malpractice suit against auditor Jim Kircher & Associates; the bank alleges the firm negligently retained an unqualified expert and failed to call that expert as a fact witness in the Kircher case.
- In the underlying Kircher trial the bank’s sole accounting expert was excluded; the jury found for Kircher and the verdict was upheld on appeal in Quad City Bank & Trust v. Jim Kircher & Assocs., P.C., 804 N.W.2d 83 (Iowa 2011).
- At the malpractice trial the jury returned a verdict for the bank; the district court denied posttrial motions, reformed the jury’s damages calculation (additur), and entered judgment against the law firm.
- The law firm appealed, arguing insufficiency of evidence on collectability, damages amount, proof Kircher’s audit was inaccurate, and causation (that a qualified expert would have changed the Kircher result).
- The bank cross-appealed the district court’s exclusion of evidence of attorney fees paid to the firm in the underlying Kircher prosecution, arguing such fees are recoverable damages in malpractice claims.
- The court of appeals affirmed on sufficiency and additur issues, but held attorney fees paid in the underlying case are an element of damages recoverable to the extent proximately caused by the attorney’s negligence and remanded for a new trial limited to the amount of recoverable attorney fees.
Issues
| Issue | Plaintiff's Argument (Bank) | Defendant's Argument (Elderkin & Pirnie) | Held |
|---|---|---|---|
| Collectability of a judgment against Kircher | Law firm’s own contemporaneous statements show judgments against Kircher were likely collectible | Statements made as litigation advocacy should not be used to prove collectability | Collectability shown by firm’s internal evaluations and letters; sufficient evidence to submit to jury |
| Amount of damages the bank would have recovered from Kircher | Bank presented testimony estimating $912,270 as difference between liquidation result and actual recovery | Amount was conclusory; bank needed detailed proof of how figure was calculated | Sufficient evidence existed to allow factfinder to approximate damages |
| Proof that Kircher’s audit caused bank’s loss (proximate cause) | Accounting expert and firm attorneys’ trial investigations showed audits were negligent and financials misrepresented | No proof the misconduct occurred at audit time; insufficient to show audit was inaccurate then | Testimony from bank’s expert and firm lawyers provided a sufficient factual basis for proximate cause |
| Causation that absence of qualified expert changed Kircher outcome | Exclusion of bank’s expert left no testimony of auditor negligence; jury could, without another expert, infer outcome would differ if expert had testified | Bank needed expert testimony showing a qualified expert would have changed verdict | Court held malpractice jury may substitute its judgment; expert predicting the prior jury’s outcome is unnecessary and improper |
Key Cases Cited
- Quad City Bank & Trust v. Jim Kircher & Assocs., P.C., 804 N.W.2d 83 (Iowa 2011) (upholding exclusion of bank’s audit expert in underlying suit)
- Hook v. Trevino, 839 N.W.2d 434 (Iowa 2013) (rejecting negligent attorney’s setoff for contingency fee; discussing fairness of malpractice damages)
- Crookham v. Riley, 584 N.W.2d 258 (Iowa 1998) (damages in malpractice require valuation of the underlying claim)
- Whiteaker v. State, 382 N.W.2d 112 (Iowa 1986) (plaintiff must show amount collectible on underlying judgment)
- Ruden v. Jenk, 543 N.W.2d 605 (Iowa 1996) (elements of legal malpractice claim)